Automatic enrolment: alternative quality requirements for defined benefit and hybrid pension schemes
24 December 2015
Guidance has been published by the Department for Work and Pensions (DWP) on the alternative tests of scheme quality for defined benefits and hybrid pension schemes used for automatic enrolment.
This guidance is primarily for employers’ advisers, who have been asked to determine whether a defined benefits scheme or the defined benefits element of a hybrid pension scheme is a qualifying scheme for automatic enrolment.
However, employers may find the guidance helpful. The law requires employers to automatically enrol their workers into a scheme of sufficient quality. From 6 April 2016, contracting-out will end. Employers will no longer be able to use the existence of a contracting-out certificate as evidence that their scheme satisfies the relevant quality requirement.
Scheme quality must instead be demonstrated by comparing the scheme against the test scheme standard, as set out in the legislation and guidance below or by applying one or more of the alternative quality requirements set out in the legislation and to which this guidance relates.